The Department of Justice gave the green light to a $1.75 billion merger between Oracle Corp. acquisition target PeopleSoft Inc. and smaller softwaremaker J.D. Edwards Inc., clearing the way for the two companies to merge as soon as Thursday.

The regulatory move is seen as a setback to Oracle's quest to buy PeopleSoft in a $6.3 billion hostile takeover. But Oracle pledged Monday to keep up the chase, and moved the deadline for PeopleSoft investors to tender their shares to Aug. 15 from July 18.

"We are extending our offer for PeopleSoft and we remain fully committed to acquiring PeopleSoft, with or without J.D. Edwards," said Jim Finn, Oracle spokesman.

But PeopleSoft is a little further from Oracle's grasp now that the J.D. Edwards merger is virtually assured. Oracle's hostile takeover bid was already far from a sure thing because of a Department of Justice antitrust review and the vehement opposition of PeopleSoft's board.

"It makes it tougher," said Eric Upin, an analyst with Wells Fargo Securities. "It's going to cost more. It's going to require potentially more regulatory oversight, or open a longer regulatory process." Upin does not own shares of Oracle, PeopleSoft or J.D. Edwards, nor does his employer have banking business with the firms.

So far, PeopleSoft investors offered to sell Oracle 43.77 million shares, 14 percent of the shares outstanding. To buy PeopleSoft, Oracle would need to buy 51 percent, and get over legal and regulatory hurdles as well.

Oracle did not disclose whether it plans to change the terms of its $19.50-per-share takeover bid after the smaller companies' merger goes through. Even if does not raise the price, Oracle would pay more -- about $7.3 billion instead of $6.3 billion -- for the combined company because PeopleSoft will issue 52.6 million new shares to buy J.D. Edwards in a stock and cash deal.

Oracle would get less cash with the combined company, since PeopleSoft will be spending some of its $2 billion cash hoard on J.D. Edwards. PeopleSoft and J.D. Edwards combined would have about $1.5 billion in cash.

Regulators will continue evaluating whether an Oracle-PeopleSoft combination would create an antitrust problem, and will include PeopleSoft's acquisition of J.D. Edwards in its study, said Justice spokeswoman Gina Talamona.

"Obviously the staff is aware of the other transaction as well. You look at all the relevant information as you review the transaction," she said.

"(Justice's) case gets somewhat stronger if Oracle is buying both PeopleSoft and J.D. Edwards," said antitrust attorney Hillard Sterling, of the Chicago law firm Much Shelist.

However, it's not clear whether the acquisition of J.D. Edwards would make or break regulatory approval of an Oracle-PeopleSoft merger. J.D. Edwards is smaller than Oracle or PeopleSoft, and it sells a more limited range of products to smaller companies.

"It really depends on how they look at it," said Upin. If regulators consider a wide view of the business software market and count the number of customers Oracle would amass in the deal, the addition of J.D. Edwards would hurt Oracle's chances, because it has about 6,000 customers, he said. But if regulators focus on the realm of huge customers dominated by Germany's SAP, Oracle and PeopleSoft, adding J.D. Edwards to the mix doesn't make much of a difference.

PeopleSoft and J.D. Edwards management, after more than a month of worry that Oracle's hostile bid would disrupt their deal, were cheerful.

"This is a very important milestone and clears the way for the J.D. Edwards acquisition to be completed," said Craig Conway, president and chief executive of Pleasanton's PeopleSoft.

Bob Dutkowsky, chief executive of Denver's J.D. Edwards, pledged that "the combined company will offer both mid-sized and large enterprise customers access to the broadest, most open suite of integrated enterprise software applications in the industry."

The news made only ripples on Wall Street, with J.D. Edwards climbing 1.6 percent to $14.77 and Oracle falling 1.6 percent to $12.64. Shares of PeopleSoft rose 0.9 percent to close at $18.